The Financial Reporting Council has dropped an investigation into
PricewaterhouseCoopers work on compliance report for Barclays Capital,
saying there was no prospect of an 'adverse finding'

Britain’s top accountancy body has dropped an investigation into PricewaterhouseCoopers’s work on compliance reports for the investment banking arm of Barclays.

The Financial Reporting Council (FRC) confirmed it had closed its probe into PwC’s auditing of Barclays Capital’s handling of client money for the eight years between December 2001 and December 2009.

The body said it had taken the decision after concluding there was “no realistic prospect the tribunal would make an adverse finding” against the accountancy firm and that it had closed the investigation and would be taking no further action.

In a statement PwC said: “This confirms our view that there was no case to answer.”

Banks have faced large fines in recent years for failures to properly segregate client funds from their own money. JP Morgan was fined in 2010 an at time record £33m by the Financial Services Authority for failing to maintain safeguards over the separation of hundreds of millions of pounds of its customers from its own funds.

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Last year, the FRC fined PwC £1.4m following its own investigation into the firm's work for JP Morgan on its segregation of client funds.

The regulatory interest in the interest followed the collapse of Lehman Brothers where many customers found that money that should have been placed in segregated accounts had not been, meaning their funds became tied up in the US investment bank’s lengthy bankruptcy proceedings.